Outlook 2026: Near-Record Markets Demand Selectivity Amidst Geopolitical Risks

• Indian markets at near-record highs require selectivity and discipline in 2026 due to late-cycle characteristics and potential corrections.
• Key triggers include India-US trade talks (tariffs), state elections, and geopolitical events impacting oil prices and currency.
• Global monetary policy divergence and USD/INR exchange rate volatility pose significant risks for Indian markets.
• AI is a crowded trade; 2026 markets will prioritize tangible earnings and strong cash flows over narratives.
• Sectoral leadership expected from manufacturing, defence, infrastructure; financials remain stable; IT/FMCG face differentiated outcomes.

Why It Matters: 2026 demands disciplined investing in Indian markets amidst record highs, geopolitical risks, and earnings focus.